01 EXECUTIVE SUMMARY Europe’s new normal

European Ecommerce Report

How consumer brands can reach online customers and grow their sales in the UK and continental Europe.

October 2020 /1 PATTERN OFFICES Our global footprint

SALT LAKE CITY VENLO LONDON MUNICH HONG KONG SHANGHAI

To talk to us about how to profitably grow your European ecommerce sales contact us at DUBAI GUANGZHOU MELBOURNE SYDNEY [email protected] INTRODUCTION About this report

Much of the thought leadership The work that’s been required that exists about European to keep product flowing to ecommerce is written with customers has been immense. retailers in mind. In this report As a business that sells on Contents we’ve taken a slightly different Amazon in Europe and provides angle, focusing on what the ecommerce consulting to many 4 24 changing ecommerce landscape consumer brands, we’ve felt EXECUTIVE EUROPEAN means for consumer brands. that pain and the satisfaction of SUMMARY CUSTOMER seeing our clients’ online sales EXPECTATIONS Europe’s retail industry has and our own increase. suffered significantly from 6 the measures to contain the In the following pages we’ve KEY COUNTRIES 25 COVID-19 pandemic during tried to do the impossible Profiling the UK, EUROPEAN 2020. However, it has been and condense into 30 pages , France, Italy, ECOMMERCE TEAM a catalyst for online sales. everything that’s important to Spain, the , STRUCTURE Europe’s shoppers in more brands selling online in Europe Sweden & . mature markets have bought right now. There’s snapshots of products online much more than the most interesting countries 26 previously, and in the less mature and online marketplaces, as 14 RETAIL CHANNEL markets it has encouraged well as much discussion of what MARKETPLACES OPTIMISATION shoppers to buy online for the consumer brands will need to The rise of first time. do in the coming months to marketplaces in optimise their online sales in Europe, including data 27 In general, marketplaces, online Europe. on Amazon, eBay, THE CHALLENGES OF retailers and omnichannel Zalando, AliExpress, CROSS-BORDER retailers who have been able to As we head into the peak trading Allegro, Cdiscount, pivot to focus on quickly scaling period, we anticipate that the Otto and Real.de. their online operations have online shopping trends seen 30 been the winners. Some brands will further convince consumer ABOUT PATTERN have also been able to build brands that there has been a 23 Our marketplace sales their direct-to-consumer web step-change in the importance of THE ROLE OF DIRECT partner and consulting presence. their online sales channels. TO CONSUMER SITES services proposition.

NICOLA HOLLOW, GENERAL MANAGER – EUROPE, PATTERN

/3 EXECUTIVE SUMMARY Executive Summary 2020’s pandemic has been a catalyst for online sales growth in much of Europe. This provides opportunities to launch and grow brands online, though understanding the nuances of the continent and its 44 countries has never been more crucial. Europe’s 740 million population agree is that higher ecommerce The result is that brands must “The market is in combined with high internet and penetration rates are here to stay. reassess their European channels online shopping penetration rates The graphic on this page shows to market, and their retail flux, but the one has delivered an online shopping how Amazon’s monthly visits are partners, to ensure their online point on which audience of a size that only higher now in each of its six main channel strategies matches these can compete with. European markets than at the changes in customer behaviour. most can agree start of the pandemic. The increased importance of is that higher During 2020, severe restrictions ecommerce also brings into ecommerce on physical stores due to the In Western and Northern Europe question how brands’ sales teams COVID-19 pandemic – with - where e-shopping penetration choose to structure themselves. penetration rates non-essential stores closed in rates are highest – consumers are are here to stay” many European markets for buying more of their shopping ECOMMERCE CATALYST several months – has hastened online. In Eastern and Southern The figures for how much the migration of the continent’s Europe, particularly Spain and Europe’s main economies are shoppers to buying online. Italy, the pandemic has prompted expected to shrink by this year more shoppers to try online look scary, but after a much more Sources: Beneath this topline trend, a shopping; behaviour which we substantial contraction in the first SimilarWeb number of interesting factors expect to stick. are at play. Marketplaces are INCREASE IN AMAZON’S TRAFFIC BETWEEN AMAZON.NL growing in popularity, while It won’t be until early 2021, when MARCH AND AUGUST 2020 73.85% many consumer brands are we can compare online shopping simultaneously placing more revenue and penetration for focus on their direct-to-consumer 2020 with the previous year that AMAZON.DE AMAZON.ES websites. Retailers are being we will be able to accurately 9.4% 38.17% squeezed in the middle of this, measure this change, But there is AMAZON.FR and the pandemic has shown already snapshot data to provide 27.33% how crucial their ecommerce hints. For example, in the UK the AMAZON.IT AMAZON.CO.UK operations are to reach their percentage of grocery shopping 8.31% 17.18% customers. bought online rose from 7% of the total in February 2020, to The market is in flux, but the 13.5% in July 2020. one point on which most can

/4 EXECUTIVE SUMMARY

half of the year, the second half for generalist or specialist vendors Lego Director for Ecommerce PERCENTAGE OF EUROPEANS is all about rebound, particularly to make their ranges visible to a Strategy & Growth Kasper Thams WHO SHOP ONLINE with the peak trading period for much wider set of consumers then says that there are two trends retail. localised footfall traffic.” which mean Europe won’t reach 83% 79% the same high rate of online sales 69% For brands who want to enter “This has been enabled by through marketplaces as occurs in 55% Europe, or grow their sales, improvements in ‘last mile’ the USA and China; the demands Eastern Europe online routes to market seem delivery and the scale of of European consumers and the 36% the obvious choice. More are consumers using ecommerce difference in structure of retail in choosing direct-to-consumer platforms –driven especially by Europe. Western Europe Northern Europe Central Europe Southern Europe or marketplaces as routes to recent necessity,” he adds. expansion, rather than third-party “European consumers are very online or omnichannel retailers. MARKETPLACES VS D2C individual and demanding when PERCENTAGE OF UK GROCERY SHOPPING Assortment and pricing are it comes to the proposition. THAT’S ONLINE Marketplaces have substantial complemented by reliability They request “lifestyle” and traffic, which clearly appeals to and transparency for shoppers broad offerings – not just simple brands. There are nearly 300 buying from marketplaces, says products. Another example is 13.5% million unique users visiting Christos Kalogerakis, CEO of the push for personalisation & Amazon’s six European sites each Greece’s largest omnichannel specialisation. This creates room 7% month. Local players are also retailer Public (PMM). He says for dedicated players and brands February 2020 July 2020 doing well. France’s Cdiscount has it’s no surprise that consumers – and makes it hard for a one-size- an average of 23.3 million unique in countries such as his are fits all approach which Amazon is visitors a month, more than third choosing to buy cross-border still largely leveraging.” of the country’s total population. from marketplaces such as PREDICTED 2020 GDP GROWTH Amazon, because reliability and He adds: “Europe has a much BY MARKET Pernod Ricard Global Ecommerce assortment cannot be taken more fragmented offline retail Leader Stuart Heffernan says: for granted in less developed landscape, and many of the strong “Ecommerce growth has been ecommerce markets. offline players are moving online.” accelerating due to the offering UK Italy Spain

of convenience, speed and access However, while marketplaces have So for the majority of brands, France to a wider portfolio of products. become much more important online success in Europe requires Germany Marketplaces, whether they within Europe’s ecommerce a balancing act, with multiple -6.5% are on established platforms landscape, there is still very online channels to service -8.3% -8.2% such as Amazon or on-demand much a belief in the value of both customers who have increased -9.5% -9.4% aggregators such as Deliveroo, omnichannel retailers and brands’ choice about where they spend Sources: offer an unparalleled opportunity own direct-to-consumer websites. their money. Eurostat, Retail Week, European Commission

/5 KEY COUNTRIES Since lockdown measures were launched COVID-secure click- POPULATION SIZE PERCENTAGE OF POPULATION WHO imposed in the UK in March and-collect services to overcome BOUGHT ONLINE 2020, there has been a huge the problem of slow delivery shift in traffic and spend towards times. online channels. One such omnichannel retailer, Despite the reopening of non- Argos, saw total sales increase essential physical stores in early by 10.7% in the 16 weeks until the 68M July, continued social distancing end of June, despite many of its requirements mean that online stores being closed, helped by sales are still substantially higher a 78% rise in home deliveries. It than last year. UK online sales became an online-only retailer, 87% in August were up 43.5% on the fulfilling orders via delivery same month in 2019. and with its click-and-collect presence within food retailer In the UK, although marketplaces Sainsbury’s stores. don’t have a majority share of online retail sales, the Since the onset of COVID-19, convenience, delivery and price pessimism about economic propositions of Amazon, eBay recovery has been high TOP THREE SHOPPING PERCENTAGE OF RETAIL SALES and others has proved hugely amongst UK consumers. As the SITES BY TRAFFIC THAT ARE ONLINE popular with consumers during uncertainty around the pandemic lockdown. remains, many expect financial and political impacts such as In response to store closures unemployment to have a longer and slowed deliveries, consumer lasting effect on their spending. brands and retailers have made Whilst economic activity is adjustments to their delivery and expected to recover as lockdown returns procedures in order to measures are lifted, the speed maintain high levels of customer and pattern of recovery will likely 19.7% satisfaction. Omnichannel vary significantly by category. retailers saw their online sales rise by more than the average in August – up by 70.5% year Sources: Sainsbury’s Argos, IMRG, United Nations, Eurostat, Centre for Retail Research on year - partly as many had & SimilarWeb

/6 KEY COUNTRIES Germany Germany has Europe’s largest Retail ecommerce sales in the The payment options available During lockdown, online online shopping audience, country are estimated to grow to consumers are a unique marketplaces Otto, Real.de and presenting a significant sales by 16.2% in 2020, largely down to aspect of German ecommerce, Amazon.de reported record sales opportunity, particularly as its the rise in online shopping during with a large number choosing of popular items such as beard economy has suffered less than the consumer lockdown in March to pay on delivery or via invoice. trimmers, dumbbells, home office others this year. The coronavirus and April. Inner-city shopping Many prefer to receive and equipment and toys. In fact, all outbreak forced the closure destinations have lost their usual examine their goods without of the top three shopping sites in of stores selling non-essential appeal due to social distancing the need to pay upfront, Germany are marketplaces, and goods in March and gradual rules, contributing to the online meaning online merchants are marketplaces accounted for at opening of stores began in May. sales of fast-moving consumer generally prepared for higher least 40% of German online sales German retail sales are predicted goods. Delivery convenience and return rates by offering a lenient even before the pandemic. to fall by 8.2% this year, but this often lower prices offered online returns policy. Likewise, flexible will be driven by falling offline have supported this situation, fulfilment options such as click- As one of Europe’s largest sales. with German consumers far and-collect grew in popularity B2C ecommerce markets, the more likely to buy from a greater over the lockdown period. pandemic has accelerated the variety of online retailers. digitalisation of retail in Germany at every level.

POPULATION SIZE PERCENTAGE OF POPULATION WHO PERCENTAGE OF RETAIL SALES TOP THREE SHOPPING BOUGHT ONLINE THAT ARE ONLINE SITES BY TRAFFIC 83.8M 79% 15.9%

Sources: eMarketer, Practical Ecommerce, United Nations, Eurostat, Centre for Retail Research & SimilarWeb

/7 KEY COUNTRIES France France is another mature traffic, all offering convenience, POPULATION SIZE PERCENTAGE OF POPULATION WHO ecommerce market where the attractive prices and delivery BOUGHT ONLINE majority of the population (70%) propositions to tempt customers. buy some goods online. It’s estimated that retail ecommerce During the height of lockdown, sales in France will rise by 17.1% Amazon’s six French distribution by the end of the year, with the centres were shut down for a increase driven by the nation’s month over disputes with labour 65.3M strict lockdown restrictions in unions about the health and comparison to other European safety of warehouse workers. markets. The result of a court case led to Amazon being limited to selling 70% France is facing a huge recession only “essential” goods in the due to the severe economic country, providing competitors effects of the COVID-19 with the opportunity to seize on pandemic. Concerns around its loss of market share. However, slowing demand and the the traffic to Amazon.fr has not availability of raw materials seen a long term impact, and have affected the country’s site visits rose by 27% between overall production capacity. March and August. TOP THREE SHOPPING PERCENTAGE OF RETAIL SALES Similarly, a rise in unemployment SITES BY TRAFFIC THAT ARE ONLINE and economic uncertainty are Much like other countries across expected to restrain economic Europe, French consumers who growth in France. previously didn’t use the internet for daily purchases will now have Rivalry is high between global developed new shopping habits and local players in the French that are expected to stick in the ecommerce market, and the longer term. increased opportunity from the closure of non-essential 10.9% retail stores during lockdown heightened the competition. Amazon, eBay and French marketplace Cdiscount are the Sources: top three shopping sites by eMarketer, United Nations, Eurostat, Centre for Retail Research & SimilarWeb

/8 KEY COUNTRIES Italy Italy has had one of the lowest in physical shops other than In April and May we were Amazon saw a massive increase rates of ecommerce penetration supermarkets and pharmacies, contacted by several Italian in traffic between the end of in Europe, with only 3.7% of retail driving many to buy online for the brands keen to sell their products February and beginning of March. sales made online pre-pandemic. first time. online for the first time to replace And it was still up by more than The low rate of ecommerce some of the trade they were 8% on the March figure in August. in Italy is mostly down to Consumer behaviour was losing from offline channels. sociodemographic factors, such widely affected by containment Amazon was their channel of The sales growth rate in Italy as a lower broadband penetration measures, leading to panic choice, and it’s easy to see why. appeared to be in sync with the and a large ageing population buying and a shift in demand changes to quarantine measures. who are less likely to shop online. to ecommerce. Italy saw a peak Amazon Italy takes more than Following the effects of the However, this is now changing. in online retail sales in the first 30% of the total share of traffic to pandemic, we can expect that weeks of March – an increase shopping sites in the market. In Italian consumers will not return The country was hit particularly of 90% compared to the same comparison, the second and third entirely to bricks-and-mortar hard by COVID-19 and was period of the previous year. most visited sites – eBay and stores, and ecommerce sales will one of the first to impose a AliExpress – take circa 12% and continue to be concentrated on full lockdown. Restrictions 2% of traffic. the well-established marketplaces limited consumers from buying serving the market.

POPULATION SIZE PERCENTAGE OF POPULATION WHO PERCENTAGE OF RETAIL SALES TOP THREE SHOPPING BOUGHT ONLINE THAT ARE ONLINE SITES BY TRAFFIC 60.5M 38% 3.7%

Sources: Statista, Sellics, United Nations, Eurostat, Centre for Retail Research & SimilarWeb

/9 KEY COUNTRIES Spain In comparison to other European and AliExpress are the most POPULATION SIZE PERCENTAGE OF POPULATION WHO countries, Spain’s online market visited shopping sites; and have BOUGHT ONLINE has developed relatively slowly, been praised for improving but it is still an attractive the standards of logistics and destination for brands to sell encouraging the use of online online. services among the Spanish population. Pre-pandemic, 58% of the 46.8M population bought goods Spanish customers have adopted online. We expect this to be AliExpress more than those in substantially higher now due to other EU markets, encouraged the national restrictions on store by the cheap prices of goods 58% shopping earlier this year, and sold by Chinese brands and the more recent local lockdowns willingness to accept the longer in certain regions. lead times for delivery. In fact, it has been so successful in the Since the confinement of the market that AliExpress opened population due to COVID-19 a new air route to Spain in July began in Spain, online sales have to reduce delivery times by 30% grown by a reported 55%. While on orders being delivered cross- TOP THREE SHOPPING PERCENTAGE OF RETAIL SALES ecommerce categories such as border from China. SITES BY TRAFFIC THAT ARE ONLINE fashion, footwear and pets saw a decline in sales, sports, furniture The third most visited site is and gardening categories all El Corte Ingles, Spain’s most saw growth during the initial high-profile department store. lockdown. However, delivery Bricks-and-mortar retailers are times have been a challenge for responding to changing shopping Spanish ecommerce businesses behaviour and shifting resources due to the saturation of logistics to enable online sales. Non-food centres and the huge surge in retailers and supermarkets have 5.4% online orders. adapted by adding new delivery services - such as curb side Top shopping sites in Spain pickup and collection at lockers include a mix of marketplaces - to match consumer demand for Sources: Cross-border M agazine, Inditex, United Nations, Eurostat, and traditional retailers. Amazon more shopping options. Centre for Retail Research & SimilarWeb

/10 KEY COUNTRIES Netherlands Though it is one of Europe’s of the COVID-19 outbreak as million visits that market leader and offer translated content are smaller countries, the Netherlands Government recommendations to Bol.com saw from customers in favoured. has enjoyed rapidly growing stay at home led to a drop in sales the Netherlands in August. Some ecommerce market in recent in physical stores. Dutch shoppers are also still Quick delivery and fulfilment of years. 81% of the Dutch choosing to buy products cross- orders are important elements of population have bought goods Amazon launched a localised border from Amazon Germany, as the ecommerce shopper journey online in the last year, with mobile site for the Netherlands in early it has a wider selection and can in the Netherlands as a result of commerce a key driver. 2020, but has some way to go to be cheaper. the country’s reputation for best- match the rates of traffic seen by in-class delivery and logistics. Dutch gross domestic product fell local competitors Bol.com and The Netherlands has a large Ecommerce delivery methods by 8.5% in Q2 of 2020, driven by a Coolbue. number of ecommerce shops per have evolved to include even slump in household consumption. capita, and homegrown online delivery by bicycle. Brands who While shops in the Netherlands Amazon’s traffic has grown retailers are also an important want to offer a localised website were not forced to shut as part of from 6.5 million to 11.3 million route to market for international for the market must consider lockdown measures, ecommerce visits a month between March brands. Localisation is crucial for the importance of providing a spending has still increased and August this year. This is still success in the market; those who prompt, tailored delivery service considerably since the start small compared to the circa 54 appeal to local tastes and trends to suit Dutch consumers’ needs.

POPULATION SIZE PERCENTAGE OF POPULATION WHO PERCENTAGE OF RETAIL SALES TOP THREE SHOPPING BOUGHT ONLINE THAT ARE ONLINE SITES BY TRAFFIC 17.1M 81% 9.9%

Sources: eMarketer, United Nations, Eurostat, Centre for Retail Research & SimilarWeb

/11 KEY COUNTRIES Sweden Sweden is a particularly Sweden’s large number of POPULATION SIZE PERCENTAGE OF POPULATION WHO interesting market for brands internet-savvy and multilingual BOUGHT ONLINE who want to sell their products consumers has meant local online. As the only EU country ecommerce retailers have faced not to introduce lockdown increased competition from measures, its economy has bigger international online shrunk far less than the others retailers and marketplaces. due to the pandemic. Estimates suggest more than 10.1M one-fifth of online sales in the At the same time, it is due to be market are cross-border. the next market to get its own localised version of Amazon. In fact, although two of the 82% top three shopping sites in With 82% of its 10.1 million the country are local retailers, population having bought goods Amazon’s US instance has the online in the past year, Sweden third highest traffic share. is a mature market in terms of ecommerce, and soon to be This summer, Amazon even better connected. Sweden’s announced it will launch in Government has the goal of Sweden as part of a plan to TOP THREE SHOPPING PERCENTAGE OF RETAIL SALES giving 95% of its population expand its presence in Europe. SITES BY TRAFFIC THAT ARE ONLINE access to high-speed internet Amazon has previously been of 100 Mbps by 2020, and available to Swedish consumers 98% access to 1 Gbps internet through its German instance, connections by 2025. but this launch will provide the localised experience that we expect to drive the percentage of total retail sales occurring online much higher. 10.3%

Sources: United Nations, Eurostat, Centre for Retail Research & SimilarWeb

/12 KEY COUNTRIES Poland Prior to the pandemic, the Consumer behaviour in Poland POPULATION SIZE PERCENTAGE OF POPULATION WHO Polish ecommerce market was is dictated by a desire to BOUGHT ONLINE developing well, driven by strong receive value for money. Online consumer confidence and high shoppers tend to be highly GDP and wage growth. 54% of conscious of cost; and keen to its 38 million population were compare prices, websites and buying goods online before the special offers before purchasing. pandemic, and the percentage of This is reflected in Poland’s 37.8M total retail sales that take place top three shopping sites: online is also encouraging. Allegro, AliExpress and Empik – all of which offer goods at 54% Although online shopping has competitively low prices. taken some time to progress in Poland, ecommerce is set Despite AliExpress’s appearance to experience double-digit on the list, cross-border growth in 2021. This bucks the spending in Poland is relatively overall economic trend. Due low, making up 6% of total to the COVID-19 outbreak and ecommerce spend in 2019. full domestic lockdown in the country, the country technically Amazon has also been eyeing up TOP THREE SHOPPING PERCENTAGE OF RETAIL SALES entered a recession in Q2 2020 the market in a bid to compete SITES BY TRAFFIC THAT ARE ONLINE for the first time since the with local marketplace Allegro Communist era. and is expect to launch a localised proposition soon. The marketplace giant already has a section within its German website, helping it to build a picture of what Poles want to buy online. 7.2% It will face strong competition from Allegro, which has nearly a third of the total population of Poland as active buyers. Sources: JP Morgan, Oxford Economics, United Nations, Eurostat, Centre for Retail Research & SimilarWeb

/13 KEY MARKETPLACES The rise of marketplaces While online sales through marketplaces don’t match the levels seen in the USA or China, Amazon and a number of local competitors have taken considerable European market share in the past five years. Marketplaces were slower to Christos Kalogerakis, CEO of Despite this, there is still a belief “Amazon and take online market share in Greece’s largest consumer in the value of both omnichannel Europe than the USA or China, electronics retailer Public retail and brands’ own direct-to- Tmall have used but they are now an increasingly MediaMarkt (PMM) sees this consumer websites. transparency to important route to market for trend: “Greeks buy from brands. For instance, Amazon is Amazon even though it’s Lego Director for Ecommerce their advantage estimated to have a circa 30% not in this country. They buy Strategy & Growth Kasper in their home share of the UK and German from it because of Amazon’s Thams doesn’t believe that markets, and ecommerce markets. assortment and price.” PMM marketplaces will become as is addressing this by turning dominant in Europe as they have marketplaces In the following pages, we profile Public’s ecommerce site into a in the USA or China, but that present in Europe some of the most important marketplace. brands need to get the formula and interesting marketplaces right for their other channels or are doing the operating in Europe. From the Kalogerakis believes PMM can they will miss out on the coming same” statistics presented, it is clear gain traction as the Greek market ecommerce growth. that they attract significant is underserviced online and traffic and have high visitor ecommerce is growing quickly. He says: “First and foremost, I engagement, which has The number of sellers signed think the share of ecommerce translated into sales. up to the platform has grown will grow. More ecommerce by more than four times this brings more transparency – Marketplaces also accounted year, driven by the pandemic which means you need to fight for 59% of the 143 billion encouraging them to seek new harder for the shoppers.” euros spent on cross-border routes to market. ecommerce by Europeans in Amazon and Tmall have used 2019, Cross-Border Commerce This very much resonates with transparency to their advantage Europe estimates. Pattern’s recent experiences as in their home markets, and an Amazon seller in the region. marketplaces present in Europe We’ve seen significant interest in are doing the same. Thams Amazon as a sales channel from warns omnichannel retailers brands in less digitally mature and brands must differentiate markets. themselves if they want to build Sources: loyal audiences. Cross-Border Commerce Europe, Internet Retailing

/14 KEY MARKETPLACES Amazon Currently operating in six a multitude of benefits from to continue selling their products NUMBER OF PAGES PER VISIT European countries, Amazon’s free and quick delivery to on Amazon across all European dominant position for entertainment and media; and is instances will soon need to split ecommerce sales means that a key purchase driver. The annual their inventory into warehouses 9.6 9.5 9.3 in both the UK and at least one every brand should have a cost of Prime varies by market, 8.3 strategy for the marketplace – with the price being cheaper in other European country. 8.1 7.7 whether that be to work with markets where Amazon is trying Amazon, to compete against it to take market share, such as the With the imminent launch of or co-exist. Netherlands. the marketplace in Poland and Sweden, we expect Amazon’s Interesting shopping behaviour The marketplace’s substantial market share within Europe to emerged as a result of the fulfilment network - offering continue to grow. Brands should COVID-19 pandemic, with same-day delivery in major consider their position on the European consumers further cities - is considered market marketplace carefully and review Germany Italy France Spain Kingdom United Netherlands adapting to the restrictions on leading. Alongside its fulfilment it regularly. their movement in place and capabilities, Amazon’s ability turning to Amazon to fulfil their to offer in-demand goods at requirements. Amazon’s traffic consistently lower prices than has risen in every European competitor retailers has been AVERAGE VISIT DURATION market during 2020, though non- central to its success. essential stores are now open AVERAGE MONTHLY TRAFFIC again, with visits up by 17% in the Earlier this year, Amazon IN EUROPE (VISITS) 7min 7min 26 UK and 9% in Germany between announced changes to its 19 6min 6min March and August 2020. fulfilment arrangements in 58 6min 33 20 response to Brexit, stating that Top selling categories over goods in its UK fulfilment centres 4min lockdown ranged from Consumer will no longer be used to fulfil 41 Electronics, Toys & Games, orders from Amazon’s other 1.45BN Health & Beauty and Home & European instances, as currently AVERAGE MONTHLY UNIQUE Kitchen – all of which reflected occurs through EFN (European USERS IN EUROPE the shift to “staying home”. Fulfilment Network). At the same France Spain time, stock that brands send to Italy Germany Kingdom United Netherlands The marketplace’s unique Amazon’s UK warehouses will subscription proposition, no longer be eligible for pan- Amazon Prime, offers customers European FBA. Brands who want 290.6M Source: SimilarWeb /15 KEY MARKETPLACES eBay eBay is an often overlooked but The platform lets brands set NUMBER OF PAGES PER VISIT important player in European up a customisable shopfront, ecommerce, facilitating both creating a central shopping consumer-to-consumer sales destination for buyers to browse 10.72 10.07 and business-to-consumer sales a full product catalogue. As 9.36 through its localised websites. eBay allows sellers to list both 8.92 8.13 8.31 new and second-hand product, 7.32 eBay has a total average monthly an eBay shop allows brands to 7.1 7.15 traffic of 382 million users across communicate their authenticity 5.86 5.37 Europe with the UK being its and product provenance

largest market, followed closely plus offers more branding Portugal by Germany. Across its five opportunities than are possible 2.6 largest European markets, eBay’s with other online marketplaces.

Spanish site has seen the highest Ireland Switzerland Poland Netherlands Spain Italy Austria France Belgium Germany Kingdom United year-on-year traffic growth of As the second-largest 26.14% since August 2019. marketplace in Europe, its business model has evolved over Typically, top-selling categories the years towards a fixed-price on the platform are Electronics & offering - which is much more Accessories, followed closely by attractive to brands - rather than AVERAGE VISIT DURATION Clothing & Accessories. Further the auctions for which it was to this Automotive, Health & originally known. Beauty and Sports & Outdoors 10min 10min 07 are popular categories in many 8min 02 markets. 8min 48 7min 7min 7min 10 6min 6min 7min 39 40 50 57 03 15 AVERAGE MONTHLY TRAFFIC AVERAGE MONTHLY UNIQUE 5mins IN EUROPE (VISITS) USERS IN EUROPE Portugal 2min Spain Belgium

07 Ireland Netherlands Switzerland Austria Italy Poland Germany France Kingdom United

382.8M 143.8M Source: SimilarWeb /16 KEY MARKETPLACES Zalando Zalando is Europe’s leading after launching its main site, NUMBER OF PAGES PER VISIT online fashion and lifestyle the platform launched Zalando platform currently operating Lounge, a shopping club in 17 markets with a total of 42 providing members access to 12.95 12.01 12.23 million monthly visitors to its exclusive promotions and events. 11.49 sites. It offers clothing, footwear, 10.41 9.71 9.71 10.01 accessories and beauty from Fashion brands are able to 9.15 9.50 9.58 9.62 8.58 8.61 8.71 an assortment of international list their products on its site, 7.96 brands ranging from world but retain control over the 6.4 famous names to smaller local assortment sold, prices and brands, as well as its own private the representation of their label brands. brand. Finally, Zalando’s fulfilment solutions give fashion

The business cites three main brands access to its logistics UK Spain Netherlands Ireland Republic Czech Italy Denmark Germany France Austria Poland Sweden Luxembourg Belgium Switzerland Norway areas of focus for its success infrastructure and it takes over strategy: its customers, brand the order fulfilment for partners partners and infrastructure. To from inbound to return. gain its customers’ trust, Zalando places its focus on always Despite a challenging trading providing the current season’s environment this year, Zalando AVERAGE VISIT DURATION fashion trends at maximum has seen strong growth in its availability and offering a best first half, with gross merchandise practice customer experience value (GMV) up 25.1% and active 12 through strong personalisation customers up 20.4% year-on- min and customer service. Soon year to more than 34 million. 07 9 Luxembourg 8 8 Switzerland 8 8 8 min Germany Netherlands 7 7 min min min min min Czech Republic Czech 7 7 17 6 min min 42 44 47 50 52 Ireland min AVERAGE MONTHLY TRAFFIC AVERAGE MONTHLY UNIQUE 6 6 6 6 min min min min min 25 38 42 44 IN EUROPE (VISITS) USERS IN EUROPE 5 min 55 min 14 28 35 41 23 Italy Austria Belgium Sweden France Poland Spain Finland Denmark Norway Kingdom United

109.1M 42M Source: SimilarWeb /17 KEY MARKETPLACES Real.de German marketplace Real.de During the COVID-19 outbreak, AVERAGE MONTHLY TRAFFIC AVERAGE MONTHLY UNIQUE offers an extensive range of the marketplace saw peak traffic IN EUROPE (VISITS) USERS IN EUROPE 300,000 products that it sells levels between March and April itself, plus another 19 million reaching 43 million monthly that are supplied by third-party visits. As one of the most sellers on its platform. These are mature ecommerce markets in spread over more than 5000 Europe, consumer adoption of product categories, including ecommerce was already high in 24.3M 12.8M consumer electronics, furniture, Germany prior to the pandemic, media, DIY, cosmetics, and and Real.de has been one of the sports and outdoor. local players that’s helped to drive this. With nearly 13 million monthly visitors, the marketplace is In June 2020, Real.de was widely recognised as one acquired by German retailer of Germany’s most popular Schwarz Gruppe, which owns ecommerce sites, offering German grocery retailer Lidl and NUMBER OF PAGES AVERAGE VISIT shipping to 30 different hypermarket chain Kaufland. PER VISIT DURATION countries. Similar to Amazon The marketplace was owned for and eBay, resellers and brands a short time by an investment can list their products for sale firm, having previously been on the site. part of Germany’s largest retail business Metro AG. Benefits to selling on Real.de 4.3 3M 21S include its legal seller protection, Schwarz Gruppe plans to its various on-site customer change Real.de’s branding to payment options, and low seller Kaufland, but will continue fees. The marketplace doesn’t to operate the site as a charge sellers listing fees, rather marketplace. This should a monthly cost and commission complement Kaufland’s 1300 rate, which is product stores, which offer a large dependent. selection of goods at low prices to customers across Germany and seven other Central and Eastern European countries.

/18 KEY MARKETPLACES Otto Established in 1949, Otto to shopping online now more AVERAGE MONTHLY TRAFFIC AVERAGE MONTHLY UNIQUE became one of the biggest mail- than ever, it’s expected these IN EUROPE (VISITS) USERS IN EUROPE order catalogues for everyday numbers will continue to rise. shopping. Having embraced the digital age - and transitioned As part of its customer value to a marketplace where it sells proposition the marketplace goods itself as well as hosting offers a subscription model, Otto third-party sellers - it’s now the UP which gives customers a host 53M 19.5M third most visited shopping site in of benefits from free delivery, to Germany. exclusive offers and discounts from its partner brands. Supporting a wide variety of NUMBER OF PAGES PER VISIT AVERAGE VISIT DURATION product categories from fashion In addition to this, the to household goods and furniture, marketplace also offers a rental the marketplace lists over service, Otto NOW through 8.78 6min 12 6800 brands and three million which customers can flexibly rent products. technology, household, sports and furniture products, with a Otto’s sales rose by more than subsequent option to purchase 25% in its latest half-year results them. 4min 35 to the end of August. It has acquired more than a million new With its own delivery operations 5.28 customers and 500 new brands company Hermes, Otto is able so far in 2020. to compete with Amazon’s high-level logistics and benefit Ranking behind Amazon and from the increase in cross- eBay, Otto’s German instance border business across all major still sees an average of 53 million European markets. monthly visits to its site. For retailers and brands looking Meanwhile, its Dutch instance, to expand their operations in although not as established, has Germany and the Netherlands, an average of 2.5 million monthly Otto provides an opportunity to Germany Netherlands Netherlands Germany visits. With consumers in both the tap into its established customer

German and Dutch markets open base. Source: SimilarWeb

/19 KEY MARKETPLACES Cdiscount Cdiscount is the second largest Adding to this, its logistic AVERAGE MONTHLY TRAFFIC AVERAGE MONTHLY UNIQUE marketplace in France after expertise and own fulfilment IN EUROPE (VISITS) USERS IN EUROPE Amazon, positioning itself as an service, Cdiscount Fulfilment, online discount retailer, with its allows brands to hand over the audience looking for online deals entire fulfilment process and and special offers. Its 64 million order tracking to the retailer. monthly site visits offer plenty of sales potential for brands and Brands can benefit from its well- 64.1M 23.3M retailers looking to expand their developed distribution network business in the French market. which boasts the option of fast and flexible home delivery or Consumer electronics make up a collection at one of its thousands significant portion of Cdiscount’s of pick-up points throughout sales amongst other popular France, Belgium, Luxembourg, categories including, homeware, Germany and Italy. clothing, jewellery, and toys. Strict lockdown measures in NUMBER OF PAGES AVERAGE VISIT Alongside the vast product France have supercharged PER VISIT DURATION choice, the marketplace has ecommerce sales drastically as its own loyalty programme, consumers shifted to purchase Cdiscount à volonté, giving more goods online. As Amazon’s members a range of special French warehouses came under privileges. Much like competitor scrutiny for health and safety offerings, members receive regulations, traffic on Cdiscount 5.61 6M 13S unlimited free delivery, special skyrocketed between March and customer service benefits, May 2020 from 50.5 million visits unlimited access to press media, to 69.5 million. and a shared subscription for the family. Source: SimilarWeb

/20 KEY MARKETPLACES AliExpress AliExpress is the ecommerce conscious. Traffic-wise, Spain is NUMBER OF PAGES PER VISIT retail platform of Alibaba, the marketplace’s largest market currently operating in 220 and it has noticed this. In fact, it different countries and regions. chose Spain for its first physical 11.77 11.9 10.68 10.77 11.02 11.09 In 2019, the marketplace opened store and partnered with popular 10.17 10.38 10.41 10.59 its doors to welcome sellers from retailer El Corte Inglés to add its 9.73 9.83 9.96 Europe, with Spain, France, Italy, products to the marketplace. and Poland being key markets. Keen to emulate the success Buyers can find a huge array of livestreaming in China of products divided into many elsewhere, AliExpress used categories, and its average of 145 the COVID-19 pandemic as the million monthly visitors in Europe perfect opportunity to empower may start to convince Western livestreamers from European Portugal Spain Sweden Ukraine Kingdom United Netherlands Italy Poland Denmark Republic Czech Germany Belgium France brands to begin listing their markets where it has a strong products on the platform. presence namely Poland, Spain and Ukraine. Having launched In Spain, ecommerce sales are the AliExpress Connect platform predicted to experience faster in May this year, we can expect growth than any other country to see livestreaming gain AVERAGE VISIT DURATION in Western Europe thanks to the popularity particularly in the rise of AliExpress and Spanish post-COVID era. consumers being more price- 10 min 11 min 10 min 10 9 min 10 min 53 9 min 9 min 9 min 9 min 05 12 8 min 9 min 9 min 35 36 40 8 min 02 07 18 23 33 45

AVERAGE MONTHLY TRAFFIC SIZE OF PRODUCT RANGE IN EUROPE (VISITS) Portugal Sweden Spain Netherlands Denmark Poland Italy Republic Czech Germany Kingdom United Belgium Ukraine France

145.6M 100M AliExpress,Source: Reuters SimilarWeb, /21 particularly popular. for branded goodsbeing health andbeauty;withsearches fashion, home, childcare and marketplace includeelectronics, sites. Top five categories onthe than search enginesorother for products onAllegro, rather consumers start theirsearch significant percentage of Polish Much like Amazon intheUK,a 50% inthefirst halfof2020. 25% in2019, andby more than merchandise value (GMV) up strong. Allegro reported gross pandemic, onlinesaleshave been in recession asaresult ofthe Though Poland istechnically and relatives backhome. - whouseitto buyfor friends living inotherEuropean markets is alsopopularwithPolish expats Operating onlyinPoland, thesite merchants sellingonthesite. million active buyers and117,000 its site eachmonth,with12.3 welcomes 27 millionvisitors to Polish online marketplace Allegro Allegro its numberonepriority. the Polish market, whichremains has noplansto expand beyond growth. The marketplace says it believes gives itscope for further sales are online, whichAllegro Only 7.2% ofPoland’s total retail increasing itsfintech activities. its delivery proposition and Allegro isconsidering improving with thelikes ofAmazon, offering. Initsbidto compete the country’s largest initialpublic intends to undertake what willbe Stock Exchange. It its intention to float onthe Just recently, Allegro announced 200.5M IN EUROPE(VISITS) AVERAGE MONTHLY TRAFFIC 12.88 PER VISIT NUMBER OFPAGES

27M 10M 13S

USERS INEUROPE AVERAGE MONTHLY UNIQUE DURATION AVERAGE VISIT

KEY MARKETPLACES

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Source: SimilarWeb, Allegro, Yahoo Finance ANALYSIS The role of D2C A direct-to-consumer website can pay dividends for brands who understand how to maximise their value as a channel to market.

Brands regularly ask us whether growth opportunity that they should bother with creating complements, not competes localised direct-to-consumer against existing channels. D2C is (D2C) websites to service about value and not volume for customers in Europe, or whether us, it is an opportunity to engage marketplaces and third-party with consumers in our existing retail channels are enough to markets with a value give coverage. add proposition, but also reach new consumers where we Our advice always begins with currently don’t have a presence examining the role of each to grow our geographic channel for the brand, and penetration.” identifying whether there is a clear role for a D2C website that Duffin adds: “D2C also gives differentiates it from the other us an added benefit of deeper channels. consumer insight to help shape and influence our product, We found they broke down into Unsurprisingly, the brands that Anthony Duffin, ex-Global promotion and pricing strategies.” three main areas: delivered the best D2C website Head of Digital at PZ Cussons experience tend to be those says that a brand should gain We’ve previously benchmarked l Value add products – such who have a focused strategy both direct and indirect the added value provided to as online exclusives and that prioritises the D2C channel, benefits from its D2C websites: customers by 100 direct-to- personalised products including Nike and Nespresso. “We see D2C as an incremental consumer websites in Europe. l Value add services – such as extended warranties or a “D2C also gives us an added benefit of subscription service

deeper consumer insight to help shape l Value add content – such and influence our product, promotion and as buying guides or other editorial content that supports pricing strategies” customers in making the Anthony Duffin decision to buy

/23 ANALYSIS European customer expectations Europe’s online shoppers have high expectations at every stage of the shopper journey, and brands must take this into consideration when assessing their online routes to market.

Our benchmarking work for other online and offline sales Google – we assessed the channels. omnichannel experience provided by 223 retailers across 10 In Western Europe next-day European countries for a Google delivery is often standard for non- study – means we have great grocery orders, and increasingly 65% OF59% BRANDS FEATURED OF BRANDS RESPONDED TO A CUSTOMER knowledge of what European same-day delivery is being EMAIL WITHIN 24 HOURS PRODUCT RATINGS & REVIEWS shoppers expect. offered in major metropolitan areas. Amazon wasn’t the first Below we outline what a seamless to offer this, but its highly shopping experience means for a competitive fulfilment operation European customer. has made it a standard that other retailers must match. A great customer experience includes: Click-and-collect is also a popular l A user-friendly mobile website fulfilment method in markets l Next-day delivery option such as the UK, France and l Guaranteed delivery day Germany. Even Amazon and eBay l have got in on the game. Free returns 84%OF BRANDS OFFERED 86%OF BRANDS OFFERED l Click-and-collect GUEST CHECKOUT FREE DELIVERY l Localised payment options Amazon has a growing network of l No taxes or duties added at lockers that customers can have checkout their parcels delivered to, to pick intense. European shoppers are l Guest checkout option up at their convenience, and eBay used to shopping around to get “In Western partnered with UK retailer Argos the best deals, and are likely to Europe next-day European customers can also to allow customers to pick up their check prices on multiple sites, delivery is often value personalisation of products eBay orders at Argos stores. or begin their product search and services offered online, and on a marketplace that will show standard for non- this has been an area where D2C With brands not able to mandate a range of sellers and prices, to grocery orders” sites particularly have sought to a price that retailers sell products ensure that they get the best differentiate themselves from at, price competition can be deal.

/24 ANALYSIS European ecommerce team structures Should brands embed digital knowledge across their sales teams, or have ecommerce specialists to deal with their main ecommerce accounts?

The percentage of retail sales Charlotte Brownlee, Global being generated online has Ecommerce Commercial Director become significant in a number at Bacardi says that one size of countries and product doesn’t fit all, but the integrated categories across Europe. The approach is the right one for her continent’s offline retailers have business: “Culture plays a huge developed successful online part in a shaping a structure, businesses and marketplaces and the financial configuration have also grown in significance in of the business will also have an the last decade. influence. From my perspective, ecommerce teams have to be This creates a dilemma for more involved in developing a brands selling in the region, structure that works for them who must decide whether their and expect this to evolve over account managers become time; and the business needs to omnichannel retail experts, be open and dynamic to this.” with an understanding of both online and offline sales channels, She adds: “For our business or they build a siloed team there is a huge benefit to having penetration has grown, more of ecommerce specialists to ecommerce integrated into the brands have moved away from “There is a huge service their online retail and wider business as this upskills siloed models, and upskilled the benefit to having marketplace accounts. the whole organisation, making entire sales team on digital retail. ecommerce us fit for the future.” Some brands even carve out an However, there can still be integrated accelerator unit to speed up their Brands often started with an a place for specialists in the into the wider online growth. This can work ecommerce specialist or two team – particularly to service well to manage D2C websites, joining the sales team, to focus big wholesale accounts such as business as this which may struggle to get focus on selling to online grocers and Amazon – and an ecommerce upskills the whole in a large brand that’s used to marketplaces, while the mindset leader at a senior level ensures organisation” selling through third-party retail of the rest of the team was very a strategic focus on digital Charlotte Brownlee channels. much offline. As online sales channels.

/25 ANALYSIS Retail channel optimisation Increasingly FMCGs and Benchmarking should determine other brand owners want how seamless the customer to understand the digital journey provided by each performance and customer retailer is, how much value experience offered by the their ecommerce sites add retailers who sell their products. for customers and determine For them, the decisions to make best practice that the brand are around who their key retail can encourage its other retail partners should be, how can they partners to adopt. better support those partners, and how should they differentiate For brands who want to enter their digital direct-to-consumer Europe, benchmarking is a useful propositions. tool to assess which online channels and retail partners the We now see brands tiering their brand should focus on in each retail partners off the back of market, and whether a direct-to- such exercises, based on the consumer site is also required. retailers’ digital sophistication and performance. Their top tier With the rise of online of online retail partners may marketplaces in Europe, and be given exclusive products to particularly Amazon, retailers sell or offered more marketing and brands must differentiate support and funding than through the customer experience retailers in lower tiers. they provide on the websites if they want these channels to Benchmarking your online Benchmarking is a well- The benchmarking studies we deliver incremental sales. retail partners can help you to established practice for brands to conduct on behalf of brands in optimise the channel and ensure assess their product ranges and Europe look at the experience that your customers get the best pricing against the competition. their online retail partners experience when researching We recommend they benchmark provide through the eyes of the and buying your products. the online proposition and customer. We devise a scoring customer experience provided matrix for each benchmarking by their retail partners too, to project relevant to the category support the optimisation of their of the brand’s products and the online retail channels. way it is bought online.

/26 ANALYSIS The challenges of selling cross-border With most European countries part of the European Union, brands headquartered in North America and Asia could be forgiven for thinking that cross-border selling within Europe is straightforward. Alas no, Taxes & Duties despite the customs union, there is still much to consider; particularly if you want to launch localised D2C websites serving different countries within Europe or sell on marketplaces. Value Added Tax (VAT) or sales tax can be due on goods sold into European countries even if the brand has no presence there. The minimum threshold to be eligible to pay VAT as a distance seller varies by country, and brands should be aware that there is no minimum threshold in certain countries.

As a seller, it is crucial that you have a VAT number for each relevant country where you expect to reach the threshold limit.

VAT rates vary, through the standard rate is set at a minimum of 15% for all EU countries, as do zero-rated products. When creating commercial plans for selling in Europe, you should take these differences into account.

Finally, all goods coming into the EU need an HS Code, or Harmonized Systems Code. The code is required by customs officers for any commodity crossing an international border, and determines what duty is paid.

/27 ANALYSIS

Currencies & Payment Though there are circa 343 A variety of payment options million European consumers should also be considered to using the Euro, it’s not the only cater to local preferences as currency that brands selling credit card usage is low in certain cross-border into Europe need markets. Klarna is present in 12 to consider. Notable countries European countries and, when to have retained their national enabled as a payment type, currencies include Denmark, gives consumers the option of Sweden and Poland within the paying within 30 days, in three EU, and the UK and Switzerland. instalments, or other finance options for larger purchases. As a minimum we would recommend allowing cross-border In the Netherlands, many customers to buy from your consumers prefer iDEAL, an websites in both British pounds online payment system that (GBP) and Euros (EUR), even if no allows them to do a direct online other localisation takes place. transfer from their bank account.

Product safety standards & labelling

Even within the European Union, hope to sell the same product in harmonised standards across marking - including toys and differences in requirements for every European market. the EU. An upcoming rule - the consumer electronics - will need product standards and testing Market Surveillance & Compliance to nominate a “responsible remain. Vitamins & Supplements This is compounded by labelling of Products Regulation - will person”. That person must reside is one category where we have requirements, as ideally products impact brands selling certain non- in the EU and will be responsible encountered this. Each European should be labelled in the language harmonised products into the EU for all product conformity country will have its own of the country they are being online. documentation, cooperation with guidelines on banned ingredients sold to. market surveillance authorities and recommended dosages, Under the new regulation, and informing authorities if they which can hamper brands who Only some goods have Brands selling goods with a CE believe a product presents a risk.

/28 ANALYSIS

Brexit

As it stands, the United Kingdom and European Union have yet to finalise negotiations on a trade deal. As a business selling on Amazon across Europe itself, Pattern has prepared for the worst and assumed that there will be a hard border between the United Kingdom and the rest of the EU.

With this in mind, we have already split our stock between warehouses in the UK and the Netherlands.

Amazon has warned sellers Grey & Counterfeit Goods that they need to do this by As the European Union allows Bayer Consumer Health Global products entering the supply the end of 2020, as stock free trade between member Capability Director Nick Wall chain; counterfeit products in its UK warehouses will states within its borders, then it reminds businesses that can cause any brand owner no longer be used to fulfil is illegal for brands to prevent managing or limiting the free significant harm. orders from other European goods supplied for one market movement of goods breaks EU instances of Amazon being sold in another. Where competition law. However, brands It’s important that businesses through its European there are price differences are within their right to ensure constantly look to understand Fulfilment Network, and between the same goods sold that only genuine product is sold. product flows to ensure stock sent by sellers into in different EU markets, grey authentic product is supplied to Amazon’s UK warehouses market activity is more likely. He explains: “Businesses will end consumers, however they will no longer be eligible for want to ensure that they map purchase.” pan-European fulfilment by and understand the commercial the marketplace. value chain or product flows to ensure the legitimacy of

/29 About Pattern

Pattern is the premier their Amazon presence. Product grow sales through their ecommerce partner to global listings, marketing, customer direct-to-consumer websites consumer brands. With service and logistics are all and third-party retail channels. employees in 18 global locations, taken care of when a brand Pattern’s ecommerce expertise engages with us. We represent To discuss how Pattern could and data-driven insights help brands on Amazon.com and assist your brand in Europe visit brands to deliver profitable many of its international sites, our website or contact us at the growth on their ecommerce including all the localised sites it below email address. sites and marketplaces such operates in Europe. as Amazon, eBay, Tmall and JD.com. In addition, our consulting arm can support the development One of the largest Amazon of your ecommerce or sellers in the world, we act as marketplace strategy. We the authorised seller partner regularly support brands in for brands; buying their stock entering European markets to sell on the marketplace and online, as well as helping those [email protected] taking care of every aspect of already present to optimise and www.pattern.com/uk

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